Broadband Internet and the Stock Market Investments of Individual Investors

101 Pages Posted: 13 Jan 2021 Last revised: 7 Jul 2022

See all articles by Hans K. Hvide

Hans K. Hvide

University of Bergen - Department of Economics; University of Aberdeen - Business School; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Tom Meling

Ohio State University (OSU) - Fisher College of Business

Magne Mogstad

University of Chicago

Ola L. Vestad

Statistics Norway

Multiple version iconThere are 3 versions of this paper

Date Written: December 18, 2020

Abstract

We study the effects of broadband internet use on the investment decisions of individual investors. A public program in Norway provides plausibly exogenous variation in internet use. Our instrumental variables estimates show that internet use causes a substantial increase in stock market participation, driven primarily by increased fund ownership. Existing investors tilt their portfolios towards funds, thereby obtaining more diversified portfolios and higher Sharpe ratios, and do not increase their trading activity in stocks. Overall, access to high-speed internet seems to spur a ``democratization of finance'', with individuals making investment decisions that are more in line with the advice from portfolio theory.

Keywords: equity market participation, investor welfare, portfolio selection, stock market participation

JEL Classification: D83, G11, J2

Suggested Citation

Hvide, Hans and Meling, Tom and Mogstad, Magne and Vestad, Ola L., Broadband Internet and the Stock Market Investments of Individual Investors (December 18, 2020). Available at SSRN: https://ssrn.com/abstract=3751721 or http://dx.doi.org/10.2139/ssrn.3751721

Hans Hvide (Contact Author)

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

HOME PAGE: http://hans.hvide.googlepages.com/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Tom Meling

Ohio State University (OSU) - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

Magne Mogstad

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Ola L. Vestad

Statistics Norway ( email )

N-0033 Oslo
Norway

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